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ONTARIO
ELEVENTH ANNUAL REPORT
' OF
THE ONTARIO ENERGY BOARD
YEAR ENDING DECEMBER 31, 1970
C/
I
ONTARIO
TELEPHONE
365-2851
ONTARIO ENERGY BOARD
790 BAY STREET
TORONTO 2
March 31, 1971.
Honourable Leo Bernier,
Minister of Mines and Northern Affairs,
Parliament Buildings,
Toronto, Ontario.
Sir:
We have the honour to present herewith the annual report
of the Ontario Energy Board for the calendar year 1970.
Respectfully submitted,
/ ,j ;\v
A. /B. Jackson,
V i de_yCh a i r ma n
h\-rtd#
I. C. MacNabb
Vice Chairman
/foul.
2^
D. M. Treadgold, Q.C.
Member
ELEVENTH ANNUAL REPORT
OF
THE ONTARIO ENERGY BOARD
YEAR ENDING DECEMBER 31, 1970
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INTRODUCTION
This reoort, submitted in accordance with section 9 of
The Ontario Energy Board Act, 1964, as amended, outlines the
activities of the Ontario Energy Board for the calendar year
ended December 31, 1970.
The Board acts under the authority of The Ontario Energy
Board Act, 1964, sections 6 and 10 of The Energy Act, 1964,
sections 8, 9 and 9a of The Municipal Franchises Act and
certain sections of The Public Utilities Act and The Assess-
ment Act .
COMPOSITION OF THE BOARD
During most of the year under review, the Board consisted
of the Chairman, two Vice Chairmen and one part-time Member.
The Chairman, Mr. A. R. Crozier, retired at the end of September
and, as at the end of the year, his successor had not been
appointed.
The principal members of the Board staff are the Secretary,
the Energy Returns Officer and the Deputy Energy Returns Officer,
the Board Engineer, and the Supervisor of the Energy Studies
Section.
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FUNCTIONS OF THE BOARD
The major functions of the Board are as follows:
a) Under The Municipal Franchises Act :
approving terms and conditions of municipal gas
franchise agreements, renewing or extending
expired gas franchises or denying renewals or
extensions if not in the public interest.
Granting certificates of public convenience and
necessity for the supply and distribution of
gas in municipalities e
b ) Under The Ontario Energy Board Act. 1964 :
Granting leave to construct transmission pipe-
lines, production lines, distribution lines
and stations.
Granting authority to expropriate land for pipe-
lines and stations o
Hearing and reporting to the Lieutenant Governor
in Council on proposals of gas companies to sell
their systems, amalgamate with other companies,
or acquire shares of other gas companies.
Approving and fixing the rates and charges for
the sale, transmission, distribution and storage
of gas in the Province.
Ensuring compliance by gas companies with the
Uniform System of Accounts for Gas Utilities.
Recommending the designation of lands as gas
storage areas and the granting of permits for
drilling wells in such areas.
Authorizing storage of gas in and removal of gas
from designated gas storage areas.
Requiring and regulating the joining of interests
in gas or oil pools, and apportioning the bene-
fits of operation therein.
Examining and reporting on any matters pertaining
to energy referred to the Board by the Lieutenant
Governor in Council.
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c) Under The Energy Act. 1964 ;
Examining and reporting on certain matters
referred to the Board by the Minister of Mines
and Northern Affairs.
d) Under The Assessment Act :
Determination of proper classification of pipe-
lines for assessment purposes, when classification
of transmission lines is in disoute„
GENERAL ADMINISTRATION
By virtue of The Ontario Energy Board Amendment Act,
1970, which received Royal Assent on June 26, 1970, the
Minister of Mines and Northern Affairs replaced the Minister
of Energy and Resources Management as the minister responsible
for the activities of the Board.
A development incidental to changes in ministerial
responsibility for energy matters, was the transfer to the
Board staff of the Energy Studies Section, formerly with the
Department of Energy and Resources Management. The Energy
Studies Section provides information, analysis and advice in
a broad field of energy matters affecting the Province of
Ontario. The Section collects and maintains provincial oil
and gas statistics, develops informative appraisals of per-
tinent and evolving energy matters, and carries out special
studies as required on technological and economic developments
affecting the supply, distribution and utilization of all fuels
The Energy Returns Officer and his staff whose duties
comprise continuous supervision of the financial results of
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the activities of gas companies under the jurisdiction of the
Board, were called on by the Board in 1970 for special assistance
on an unusually large scale, especially in matters of accounting
in connection with the two major hearings of the Board discussed
elsewhere in this Report.
In accordance with the usual practice, the Board held
its hearings at locations convenient for the applicants and
other interested parties. Sixty-one hearings were heard in
various communities outside Toronto.
Thirty Board meetings were held and, in addition, a
considerable number of pre-hearing conferences and other
conferences in connection with the two major hearings dis-
cussed elsewhere in this Report.
By Ontario Regulation 344/70, Petrol Oil & Gas Company,
Limited, was exempted from section 25a of The Ontario Energy
Board Act, 1964, with respect to the sale of its natural gas
wells and distribution system on the Six Nations Indian Reserve.
Because of the interests of the Indian band and the federal
authorities the Board has little power to effectively regulate
such a system, and the exemption from section 25a was granted
by the Lieutenant Governor in Council to avoid unnecessary
jurisdictional oroblems.
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HEARING STATISTICS
During the year 107 applications and references from
the Minister were disposed of. They are classified as
follows :
The Municipal Franchises Act
Terms and conditions of gas franchise
agreements (section 9) 14
Certificates of public convenience and
necessity (section S) 4
The Ontario Energy Board Act. 1964
Leaves to construct transmission pipelines
(section 39) 5
Exoropriations for pipelines (section 40) . . . . 58
Leave for a gas company to acquire shares of
another (section 25a) 1
Rates and other charges (section 19) 23
Drilling of wells in designated gas storage
areas (section 23, referred by Minister) 2
107
APPROVALS AND CERTIFICATES (The Municipal Franchises Act)
The Board approved the terms and conditions of fourteen
gas franchise agreements which had been negotiated by gas
distributors with municipalities. Four of these were renewals
of franchises which had exoired. Five were for municipalities
in which the gas distributors were not prepared to construct
facilities immediately and for which they therefore did not
apply to the Board for certificates of public convenience and
necessity.
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In the case of the remaining five municipalities for
which franchises were approved, certificates of public con-
venience and necessity were issued following public hearings.
The largest community to be served under these current author-
izations was the Town of Fort Frances.
PIPELINE CONSTRUCTION AND EXPROPRIATION OF EASEMENTS THEREFOR
Section 37 of The Ontario Energy Board Act, 1964, requires
leave of the Board for the construction of a gas or oil trans-
mission line, and section 1+0 provides that, such leave having
been granted, the Board may authorize expropriation of pipeline
easements. The cases coming before the Board vary in importance
and in 1970 there were several applications of considerable
public interest, which deserve some special mention in this
Report .
Following a public hearing held on June 15th, the Board
granted leave to Dome Petroleum Limited to construct an 8-inch
liquid hydrocarbons transmission pipeline, located in the
Township of Sarnia and the City of Sarnia and required for
the transportation of condensate and crude oil to be used as
refinery feed stock at the Sun Oil refinery at Sarnia. Dome
receives condensate along with its crude oil supplies from
Alberta and had arranged a sale to Sun Oil. Initial deliveries
are expected to increase from 6,500 barrels per day to 20,000
barrels per day and can be further increased to i+0,000 barrels
per day.
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Following a public hearing on August 12th, the Board
granted leave to The Consumers* Gas Company to construct certain
pipelines associated with a proposal to supply gas to Ontario
Hydro for electric power generation at the R. L. Hearn plant
on the shore of Lake Ontario near downtown Toronto. The leave
granted at that time provided only for (a) a 24" line to the
Hearn plant from the facilities of the gas company nearby, at
Eastern Avenue and Booth Avenue, and (b) a 26" line 3,300* in
length in the Township of Markham extending an existing line
in an easterly direction from a point near the intersection of
Don Mills Road and an east-west C.N.R. line north of Steeles
Avenue. The gas company was not ready to proceed with an ap-
plication for leave to construct the pipeline needed to bring
additional supplies of gas to its Eastern Avenue facilities in
downtown Toronto from the pipeline of TransCanada PipeLines
Limited. Such a pipeline will be needed by late 1971, however,
as the existing facilities of the gas company will not then be
adequate to meet such substantial new demands.
During 1970, Union Gas Company of Canada, Limited com-
pleted the construction of a 3k" diameter Dawn-Oakville high
pressure gas transmission pipeline, the final stage being
approximately IS miles at the Oakville end. The Board, by an
Order granted in 1964, had granted leave to construct this
pipeline but provided in its Order for further approval be-
fore construction of the final 18-mile stage could commence.
The application for such further approval came on for hearing
on May 29th, at which time the need for the line was demonstrated
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and its proposed location was explained. Through most of its
length the line parallels and is very close to an existing 26"
line of the company, but at one point it diverges. Mr. John
Micallef, a landowner affected by this diversion, objected to
the granting of leave to construct since the line would pass
through a portion of his market garden. Some route modifica-
tions were agreed to by the Applicant before Board approval was
granted, but they did not go all the way toward meeting Mr.
Micallef f s objections. Upon his appeal to the Lieutenant
Governor in Council, the matter was referred back to the Board
for further hearing on the particular question of the disputed
part of the line location. Following this further hearing, the
Board decided that its earlier decision should be confirmed.
The pipeline, which was needed to meet the 1970-71 winter peak
demands, has since been constructed.
Authorization was granted during the year to Union Gas
Company of Canada, Limited for expropriation of fifty-eight pipe-
line easements on private lands. These expropriated easements
were required, where agreements could not be reached, for con-
struction of the last stage of the Dawn-Oakville line referred
to in the foregoing paragraphs and for construction of a major
pipeline in the Counties of Essex and Kent authorized by the
Board in 1969 but constructed in 1970, namely, a 20" line 19
miles long that is one of the stages in the looping of the
company's Dawn-Windsor gas transmission line. As required by
law, a public hearing was held in every case and, in accordance
with Board practice, the hearings were almost invariably held
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in the areas affected, so that landowners would have the fullest
opportunity to be heard. Where appropriate the Board attached
conditions to the authorizations granted in order to meet partic-
ular objections.
As in previous years the Government appointed a special
inspector to act as liaison between the landowners and the pipe-
line company during construction and clean-up periods. The in-
spector also ensures compliance with any terms and conditions
of Board Orders related to construction.
PROPOSED TAKEOVER OF UNION GAS BY CONSUMERS « GAS
A 1969 amendment of The Ontario Energy Board Act, 1964 ,
prohibited a gas transmitter, gas distributor or storage company,
without obtaining leave of the Lieutenant Governor in Council,
from acquiring a substantial number of shares of another such
company, amalgamating with another company, or selling its
system. The legislation provides that an application for such
leave is to be made to the Board, which is then required to hold
a public hearing and submit its report and opinion to the
Lieutenant Governor in Council.
Late in 1969 an application was made by The Consumers* Gas
Company to acquire the common shares of Union Gas Company of
Canada, Limited. The hearing commenced in January, 1970 and
concluded in May after i+0 full days of sittings. The Board's
report was submitted to the Lieutenant Governor in Council early
in July and a decision rejecting the application was announced
shortly thereafter.
-BO-
RATES
By an application dated May 1st, 1970, Northern and
Central Gas Corporation Limited applied to the Board for ap-
proval of increased gas rates. This company operates through-
out northern Ontario and in part of eastern Ontario. The ap-
plication, which was opposed by a large number of municipal-
ities, came on for hearing in Toronto on July 13th, 1970, and
the taking of evidence was substantially completed on December
11th after some forty sittings. Arrangements were then made
to hear argument early in 1971. A decision on the hearing will
be made by the Board following a detailed review of the evidence.
One interesting aspect of the Northern and Central rates
case is the request for Board approval of a "purchased gas ad-
justment clause" to permit automatic adjustment of this company's
rates in the event of its gas purchase costs being changed by
an order made by the National Energy Board. Such a clause, al-
though new to gas rate-making in Ontario, is not uncommon in the
United States. This request is of particular interest at this
time due to the fact that the National Energy Board is currently
hearing an application of TransCanada PipeLines Limited, the
sole supplier of Northern and Central, for a substantial increase
in the rates charged by it.
In addition to the application of Northern and Central
mentioned above, there were twenty-two rate applications of a
more limited nature approved by the Board during the year. About
half of these were for the initiation or continuation of interim
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rates pending a final determination by the Board. The other
applications were related to the extension of existing rates
into areas being served for the first time and for rates cover-
ing the sale of large volumes of gas for industrial use.
GAS STORAGE MATTERS
The Board is responsible in several respects for control
of gas storage and, among other things, determines whether a
permit may or may not be granted under The Energy Act, 196i+,
for drilling in a gas storage area. On February 19th the Board
recommended the granting of permits to Tecumseh Gas Storage
Limited for the drilling of seven gas storage wells in the
Kimball-Colinville gas storage pool in Moore Township, Lambton
County. This is an important operating pool whose principal
user is The Consumers* Gas Company and the drilling was part of
a program by the operator of the pool for developing its storage
potential.
On November 9th, the Board recommended the granting of
permits to The Consumers 1 Gas Company for the drilling of
three wells in the Crowland gas storage pool in the Regional
Municipality of Niagara. The Consumers* Gas Company is the
operator of the pool and the drilling was for the purpose of
increasing its deliverability and turnover capacity.
Applications have been before the Board since 1969 for
approval of proposals of Union Gas Company of Canada, Limited,
and Imperial Oil Limited to develop, as a joint venture, the
Bickford and Sombra gas storage pools in Lambton County. These
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two pools, taken together, are very large and their development
will be a major undertaking. The applications, which were op-
posed by The Consumers* Gas Company, came on for hearing in the
fall of 1969, but the hearings have been adjourned from time to
time and are now expected to come on again some time in 1971.
CONTROL OF OIL AND GAS PRODUCTION IN LAKE ERIE
A somewhat unusual matter that came before the Board in
1970 and is not yet completed was a reference from the Minister
of Mines and Northern Affairs for review of action taken by him
in connection with the production licence of Atlas Oil & Gas
Limited. He had imposed conditions on the production licence
of that company designed to prevent the production of oil from
certain gas wells of the company in Lake Erie, and those con-
ditions were considered by the company to be unnecessarily
onerous. The Energy Act, 1964, requires that, having taken such
action, the Minister must refer the matter to the Board for
hearing and report. The matter came on for hearing before the
Board on November 2nd, 1970, but was then adjourned sine die at
the request of Atlas Oil & Gas Limited and with the consent of
the Minister, the Board being assured that the public interest
would not be affected by the adjournment. It was expected that
the matter would be brought before the Board again in 1971.
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